Nicaragua canal targets big ships

Monday, June 17, 2013

Developers proposing to build a new canal across Nicaragua are targeting operators of large ships that will not pass even through the new set of locks being build at the Panama Canal.
"It has become imperative to develop and construct a wider and deeper interoceanic canal to support bigger load weight and generate greater efficiency," said Wang Jing, the chairman and chief executive officer of HKND Group, in a statement posted on his company's Website.
Last week Nicaragua's unicamaral legislature approved granting a 50-year concession to HKND to plan and build the canal by a 61-28 voted with an option for a 50-year extension. The project is supported by President Daniel Ortega.
HKND said its "actions will be guided by the principles of respecting sovereignty,
protecting environment, benefiting people and spurring economy and
undertaken in the spirit of openness, fairness, integrity and
transparency."But the proposal was strongly opposed by legislators who expressed concern about the scope of the project, which would also include ports, foreign trade zones, a pipeline and airport and environmentalists, the BBC reported.
The HKND Website said "though the Panama Canal is being expanded to take 13,000-TEU
containerships, this limit is already being tested by profitability
pressures – the largest Super-Post-Panamax ships now account for over
10 percent of global container shipping capacity. Since the expanded Panama
Canal will not be able to accommodate these ships, the substantial
efficiencies that these mega-freighters bring will be partly negated by
the longer route they will need to traverse in order to serve the Asia –
U.S. East Coast corridor. The Nicaragua Canal would be able to
accommodate the largest ships and would be the shortest passage for
containerships between Asia and the U.S. East Coast."
The company also highlights the potential for movements of large dry bulk ships, tankers, and LNG carriers through the canal.
Press reports say the project will have an estimated cost of $40 billion, but it's not clear if that figure is for the canal only or includes related projects.
HKND said the route of the canal will not follow the San Juan River, but did not specify the route of the waterway. It said ERM, one of the world’s leading sustainability consultancies, is in the process of independently assessing the environmental and social impact of various routes under consideration.
It said China Railway Construction Corp. Ltd. has been engaged to conduct the initial technical feasibility assessment consistent with international, technical, and" other standards selected by the HKND Group and that McKinsey & Company "is providing HKND with fact-based research and analysis."
But HKND said initial findings from its own commercial analysis" indicate that the combined impact of growth in East-West trade and in ship sizes could provide a compelling argument for the construction of a second canal, substantially larger than the expanded Panama Canal, across Central America. It said it believe that by 2030 the volume of trade addressable by the Nicaragua Canal will have grown by 240 percent from today and that ongoing growth in trade indicates potential congestion at the Panama Canal within 10 – 15 years, also suggesting the need for a complementary route. - Chris Dupin